Question

A city's recreation and parks department needs to expand an
existing public sports complex. The city engineer determines the
following life cycle cost estimates: Initial costruction costs will
be $225,000, annual operating and maintenance expenses will be
$85,000, in year 6 the complex will need a $75,000 refurbishment,
the estimated salvage value in year 10 is $100,000. Additionally,
the city financial officer estimates that the expanded complex will
generate $190,000 annually (... from use-fees, rental, space leased
to food and bevarge vendors, etc.). **Draw a cash flow
Diagram.**

Answer #1

Please find the following cah flow diagram:-

Particulars | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |

Initial Construction Cost | (225000) | ||||||||||

Annual Op and Maintenance Cost | (85000) | (85000) | (85000) | (85000) | (85000) | (85000) | (85000) | (85000) | (85000) | (85000) | |

Refurbishment | (75000) | ||||||||||

Salvage Value of Complex | 100000 | ||||||||||

Cash Inflow | 190000 | 190000 | 190000 | 190000 | 190000 | 190000 | 190000 | 190000 | 190000 | 190000 | |

Net Cash Flow | (225000) | 105000 | 105000 | 105000 | 105000 | 105000 | 30000 | 105000 | 105000 | 105000 | 205000 |

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